Clearance of Chassis either on Physical exports out of country or to supply to EOU are Eligible for Excise Duty Exemption: CESTAT Quashes Excise Duty demand in favour of Ashok Leyland [Read Order]

The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the clearance of chassis either on physical exports out of the country or to supply to Export Oriented Unit (EOU) is eligible for excise duty exemption. 

Ashok Leyland Limited, the appellant assessee was engaged in the manufacture of various types of motor vehicles fitted with engine and parts thereof falling under Chapter 87 of the First Schedule to the Central Excise Tariff Act, 1985 and the chassis manufactured are sold by the assessee to customers either through their regional sales depots located at various places or by direct sales from the factory gate. 

The assessee appealed against the order passed by the Commissioner (Appeals) for confirming the demand of CENVAT credit that was wrongly availed which was not reversed by the assessee when the chassis was exported and cleared along with interest and for imposing penalties. 

M Kannan, the counsel for the assessee contended that there was no embargo in the Rules for the export of the goods that were received into the factory under Rule 16 of the Central Excise Rules,2002. 

Harendra Singh Pal, the counsel for the department relied on the decisions made by the lower authorities and contended that the CENVAT credit was availed by the assessee under Rule 16 of the Central Excise Rules and they cannot remove the goods for export or clear the same under exemption Notification No. 108/1995-C.E. without reversing the credit. 

The Bench observed that certain numbers of chassis were cleared under Notification No. 108/95 where no duty liability will arise based on end-use. Similarly, clearances were made to EOU and some were also exported, no excise duty liability will arise. 

The two-member bench comprising Sulekha Beevi (Judicial) and Vasa Seshagiri Rao (Technical) held that the assessee was eligible for the excise duty exemption and the CENVAT credit was rightly availed by the assessee. 

To Read the full text of the Order CLICK HERE

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